Matthew Mandel

I recently picked up Moby-Dick for the first time and have been enjoying learning about the economics of whaling excursions. For example, apparently retired ship captains would provide financing for a portfolio of ships, getting a stake for annuitants who weren’t involved with the day-to-day of investing, and would add value by helping with functions like hiring:

It turned out to be Captain Bildad, who along with Captain Peleg was one of the largest owners of the vessel; the other shares, as is sometimes the case in these ports, being held by a crowd of old annuitants; widows, fatherless children, and chancery wards; each owning about the value of a timber head, or a foot of plank, or a nail or two in the ship. People in Nantucket invest their money in whaling vessels, the same way that you do yours in approved state stocks bringing in good interest.

As they went to hire the team for the ship, the primary incentive was a promise of a share of the ship’s eventual profits:

I was already aware that in the whaling business they paid no wages; but all hands, including the captain, received certain shares of the profits called lays, and that these lays were proportioned to the degree of importance pertaining to the respective duties of the ship’s company.

And the ship’s principals had to be mindful of maintaining their ownership stake in the ship to provide the greatest return to those they were investing on behalf of:

“Captain Peleg, thou hast a generous heart; but thou must consider the duty thou owest to the other owners of this ship – widows and orphans, many of them – and that if we too abundantly reward the labors of this young man, we may be taking the bread from those widows and those orphans…”